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N.C.'s income inequality 

Welcome to the "hourglass economy"

You may think North Carolina's 10.5 percent jobless rate is awful, and of course you'd be right. But that figure doesn't tell the whole story. Heck, it's not even the real jobless rate. As economists remind us, to understand the true scope of unemployment's effects, you have to take into account the number of people who, since losing their jobs, have had to settle for part-time positions or full-time jobs that pay significantly less than those peoples' previous occupations. That's called underemployment. It's something Charlotte resident Mark Jennings can tell you about.

When we last talked to Jennings (not his real name) in 2009, the former Wachovia mortgage analyst was picking up "a grocery cart full" of items at the local food bank Loaves & Fishes. He had lost his job when Wells Fargo swallowed Wachovia, just five months after his wife, Heather (not her real name either), gave birth to their baby girl.

Things got bad quickly for the pair. "To cut to the chase, one morning I realized I was pretty much out of money, and the only things we had to eat were baby food, Special K and some bananas," said Jennings. That happened a few days before I met him at Loaves & Fishes. At the time, he told us he would prefer to use a pseudonym because he thought using his real name could hurt his chances of getting a new job.

"I didn't need to worry about that," he told me last week, shaking his head. "Banking jobs aren't exactly plentiful, as I found out." Neither he nor Heather wanted to "mooch off" their families — his in Elizabeth City and hers in Indiana — so they've stayed in the area, relying on good friends when babysitting help is needed. They're doing what a lot of Americans in Mark and Heather's situation have been doing: getting by, sometimes barely, by settling for being underemployed.

Mark worked in a shoe store for a while, but quit when the store's management cut his hours; since, he has worked as a department manager at a big chain store where, again, his hours were cut. He has painted the interiors of his neighbors' homes, as well as those of some of his neighbors' friends. He has even done "some off-the-books income tax work for people on a word-of-mouth basis." Heather is currently working a part-time job she didn't want to talk about for this story, in addition to occasional substitute teaching gigs.

It's no consolation for Mark and Heather, but their story is similar to the day-to-day tales of many other North Carolinians. Just how widespread underemployment has become in the state was made clear last week by a new study from the N.C. Justice Center, gathered from U.S. Bureau of Labor Statistics statistics. The essence of the report is that the severity of the state's employment crisis has been understated. When you factor in those North Carolinians who are underemployed — as well as those who have become so discouraged that they may go for more than a month without looking for a job — you're looking at a "real" N.C. unemployment rate of 17.5 percent. In short, nearly one in five North Carolinians is looking for full-time work. That, dear readers, is approaching Great Depression numbers.

The NCJC report also found that N.C.'s employment crisis is widening the gap between the haves and have-nots. Even though wealthy households lost ground from 2006 to 2010, income inequality in N.C. has worsened. Those in the top 20 percent saw their incomes drop by 3.3 percent, while the incomes of people in the bottom 20 percent fell by 7.2 percent. The result is what NCJC calls an "hourglass economy, where the wealthy do well, those with low-incomes fare poorly, and the middle class disappears."

The NCJC study confirms what anyone who's been paying attention knows: too many people in our state are hurting badly from our stagnant, slow-moving economy. As the report concludes, widening income inequality isn't just unjust, it also "carries serious economic and social costs."

The N.C. Justice Center says the state legislature should "work towards launching all families on a path of upward mobility through efforts to create jobs that pay family-sustaining wages." Instead, of course, what we get from the legislature's GOP bosses are tax giveaways to millionaires, help for out-of-state businesses operating in N.C. that want to avoid paying N.C. taxes, and even holding unemployment checks hostage in order to pressure Gov. Bev Perdue to do their political bidding.

Meanwhile, couples like Mark and Heather Jennings struggle on. "The jobs situation is bad here," said Mark, "but we like Charlotte and we have a good network of friends, including some with children around the same age as our daughter. It's been hard, I won't lie, and it's still hard. We're both underemployed and barely making it; we've had to face it that we're basically poor now. I don't think it'll last forever, but for now, we're sucking wind."

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